Bill Gates among investors who face G4S cash call

Bill Gates may have to put his hand in his pocket to help refinance struggling security group G4S.

The company - whose reputation was hit by the Olympics fiasco - faced unwelcome headlines once more last week after it was accused by the UK government of allegedly overcharging for tagging contract, and over the weekend came reports it was considering tapping shareholders for cash to repair its balance sheet. According to the Sunday Times, chief executive Ashley Almanza said:

Shareholders have asked about this [a rights issue]. I will conduct a full review of the business and evaluate the various options, and we have many options.

The Ministry of Justice has referred G4S to the Serious Fraud Office to investigate billing practices within its electronic monitoring contract. A full audit of G4S's central government work will follow.

We assume the loss of the monitoring contract. Beyond the mechanical cut to earnings per share (2.5%), the broader risk of a contract embargo and/or margin cuts has now been amplified. We reiterate our underweight rating with a new target price of 205p (was 210p).

This is not the first time Gates has helped bail out a business in distress. Two years ago he backed a cash call at JJB Sports, although the retailer subsequently went into administration a year or so later.

Overall the market is in buoyant mood, as Chinese GDP data came in much as expected. The FTSE 100 has added 46.06 points to 6591, with miners mostly higher following the Chinese news. Anglo American has added 21.5p to £13.16 while Glencore Xstrata is up 4.4p at 264.85p. Mike McCudden, head of derivatives at Interactive Investor, said:

Solid Chinese GDP has provided the comfort many investors were looking for and equities have been given a confidence boost in early trade. However, with the ups and downs of another week of US earnings lying in wait, many nervous investors may prefer to sit on the sidelines. Most will be hoping that [US Federal Reserve chairman Ben] Bernanke's testimony mid-week will sustain the rally, but with solid US fundamentals largely priced in, the short term investors among us may have seen enough.

Elsewhere GlaxoSmithKline has shrugged off the latest in the bribery allegations from China, up 1.5p at 1750.5p. AG Barr, whose proposed merger with Britvic fell apart last week, is said to be interested in buying Glaxo's Lucozade and Ribena brands in tandem with private equity groups. Analyst Damian McNeela at Panmure Gordon said:

We think that these brands would broaden Barr's portfolio and via Lucozade, provide the opportunity to access export markets. The implied valuation range of £1bn to £1.2bn for these brands would suggest that it makes sense for AG Barr to team up with private equity, and this could be the catalyst for us to become more positive on the shares. However the deal structure will be crucial in determining the merits for equity investors and accordingly we retain our hold recommendation for the time being.

Barr, best known for Irn Bru, is steady at 522p.

But AstraZenecahas dipped 4p to £32.63 after news that finance director Simon Lowth was leaving to take the same role at gases group BG, up 9p at 1186.5p.